Syllabus: Pearson - AS Level Economics
Module: 1.1 Nature of Economics
Lesson: 1.1.6 Free Market Economies Mixed Economy and Command Economy
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Introduction
This section, 1.1.6 of the Pearson Edexcel AS Level Economics A syllabus, introduces students to the three main types of economic systems: free market, mixed, and command economies. These systems form the foundation for understanding how societies allocate scarce resources and make economic decisions.
By comparing real-world economies through these models, students learn to assess the benefits, drawbacks, and ideologies behind each. The topic also lays the groundwork for later themes, such as government intervention and market failure. It encourages critical thinking and supports the broader aim of equipping students to “think like economists”.
Key Concepts
Students are expected to understand the following:
Free market economy: Where resource allocation is determined by market forces with minimal government intervention. Individuals and firms own the factors of production.
Command economy: Where the state makes most economic decisions and owns significant means of production. Central planning replaces market forces.
Mixed economy: A system combining elements of both market and planned economies. The private sector coexists with significant government involvement.
The syllabus also includes references to the ideas of:
Adam Smith, who championed free markets and the “invisible hand” guiding self-interest to collective good.
Friedrich Hayek, who warned against the inefficiencies and risks of central planning.
Karl Marx, who critiqued capitalism and advocated for state-led economies to avoid exploitation.
Students should be able to evaluate each system’s strengths and weaknesses in relation to efficiency, equity, freedom of choice, and incentives.
Real-World Relevance
These economic systems are not just theory—they shape policy, development, and quality of life globally.
Free Market: The United States is often used as an example, with its emphasis on private enterprise and deregulation. However, it still has public services like Medicare and social security, highlighting that no economy is entirely “free.”
Command Economy: North Korea provides a stark example, with almost all economic activity centrally planned. China, though once a textbook case, has transitioned toward a mixed model over recent decades.
Mixed Economy: The UK is a classic mixed economy. The NHS is publicly funded, while most goods and services are market-driven. During the pandemic, state intervention increased sharply, from furlough schemes to energy price caps—making this topic particularly resonant with students.
You can also explore shifts over time, such as how post-Soviet nations transitioned from command to mixed economies, and the socio-economic upheaval that followed.
How It’s Assessed
In the AS exam (Paper 1), students are tested through:
Multiple-choice and short-answer questions assessing definitions and understanding.
Data response questions involving contextual interpretation of different economies.
Open-ended analysis and evaluation prompts. Examples include:
“Evaluate whether a command economy can allocate resources more effectively than a free market.”
“To what extent is the UK a free market economy?”
Command words to watch for:
Explain (for outlining definitions and distinctions)
Analyse (to break down the implications of different systems)
Evaluate (to assess strengths and weaknesses with supported judgement)
Use of real-world evidence is encouraged in longer responses. Students should also be able to refer to relevant economists as part of higher-mark responses.
Enterprise Skills Integration
This topic supports the development of key enterprise skills:
Critical thinking: Comparing systems demands students weigh up efficiency, equity, and sustainability.
Decision-making: Understanding how government policy affects businesses and households builds judgement.
Debate and communication: Role-playing a government cabinet discussion or presenting a policy argument helps embed knowledge and confidence.
Interactive tasks—like designing a simplified economy in groups or debating public versus private sector provision of a service—bring theory to life while building transferable skills.
Careers Links
This topic links closely to Gatsby Benchmarks 4 and 5 and opens up discussion on a variety of career pathways:
Public sector and policy roles: Understanding mixed and command economies is key for future civil servants or analysts.
Business and entrepreneurship: In a free market, understanding government policy helps firms navigate regulation and competition.
Economists and researchers: Evaluating macroeconomic systems is core to careers in think tanks, NGOs, and financial institutions.
International development: Many development strategies are influenced by the strengths and weaknesses of economic models.
It also provides an opportunity to show how economic systems influence the structure and values of the workplace itself—from hierarchy to incentives to risk-taking.
Teaching Notes
Tips for delivery:
Use a spectrum line activity: have students place countries along a line from command to free market, justifying their placements.
Introduce theorists as people with context—not just as names to memorise. Why did Marx write what he did? What was Hayek responding to?
Encourage real-life connections. Discuss the NHS, rail nationalisation debates, or responses to the cost-of-living crisis.
Common pitfalls:
Students often treat these systems as binary or fixed. Emphasise that most modern economies fall on a spectrum.
There’s a tendency to oversimplify or idealise systems. Encourage students to explore unintended consequences and limitations.
Extension activities:
Research task: How did the UK’s economy shift under Thatcher? What changes did New Labour bring?
Group debate: Should the government intervene more in housing?
